Valuation of Mineral Resources in Selected Financial and Accounting Systems

Robert Uberman

A.F. Modrzewski Kraków Academy, Kraków, Poland.

DOI: 10.4236/nr.2014.59045                

Abstract

The paper presents reviews of fundamental issues regarding valuation methodologies of mineral deposits: 1) recommended by mineral industry standards; 2) used for disclosures in financial statements and 3) adopted in national statistics. A discussion of historical developments of various regulations is supplemented by characteristics of key valuation methods. Differences and similarities are analysed and compared to current practices. A special attention is given to certain distinctive issues which are not shared by most of other types of assets like inclusion of decommissioning and rehabilitation costs or consequences of long duration of investment phase.

Keywords

Mineral Resources, Valuation, Accounting for Mineral Assets, Valuation Codes

Conflicts of Interest

The authors declare no conflicts of interest.

References

[1]	Special Committee of the Canadian Institute of Mining, Metallurgy and Petroleum on Valuation of Mineral Properties (2003) Standards and Guidelines for Valuation of Mineral Properties (CIMVAL).
[2]	The VALMIN Committee (2005) Code for the Technical Assessment and Valuation of Mineral and Petroleum Assets and Securities for Independent Expert Reports (The VALMIN Code).
[3]	United Nations (2010) United Nations Framework Classification for Fossil Energy and Mineral Reserves and Resources 2009. Economic Commission for Europe, ECE Energy Series No. 39, New York, Geneva.
[4]	(2012) The Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves (The JORC 2012 Code).
[5]	Nordhaus, W.D. and Kokkelenberg, E.C. (1999) Nature’s Numbers: Expanding the National Economic Accounts to Include the Environment. National Academy Press, Washington D.C.
[6]	Cottrell, G. and Cameron, H. (2012) Financial Reporting in the Mining Industry for the 21st Century. Price Waterhouse Coopers. https://openlibrary.org/books/OL18877792M/Financial_reporting_in_the_mining_industry_for_the_21st_century
[7]	KPMG (2013) Mining Financial Reporting Trends 2012. KPMG International.
[8]	KPMG (2007) Global Mining Reporting Trends 2006. KPMG International.
[9]	(2004) International Financial Reporting Standard 6 Exploration for and Evaluation of Mineral Resources, IASCF, London.
[10]	European Commission Organisation for Economic Co-operation and Development United Nations World Bank (2013) System of Environmental-Economic Accounting 2012. White Cover Publication, Pre-Edited Text Subject to Official Editing.
[11]	Hotelling, H. (1931) The Economics of Exhaustible Resources. Journal of Political Economy, 39, 137-175. http://dx.doi.org/10.1086/254195
[12]	Slade, M.E. and Thille, H. (2009) Whither Hotelling: Tests of the Theory of Exhaustible Resources. Annual Review of Resource Economics, 1, 239-260.
[13]	Barnett, H.J. and Morse, C. (1963) Scarcity and Growth: The Economics of Natural Resource Availability. Johns Hopkins University Press, Baltimore.
[14]	(1994) Accounting for Mineral Resources: Issues and BEA’s Initial Estimates. Survey of Current Business, US Bureau of Economic Analysis Washington DC.
[15]	Nordhaus, W.D. (1973) The Allocation of Energy Resources. Brookings Papers on Economic Activity, 1973, 529-570. http://dx.doi.org/10.2307/2534202
[16]	Pindyck, R.S. (1978) The Optimal Exploration and Production of Nonrenewable Resources. Journal of Political Economy, 86, 841-861.
[17]	Dasgupta, P. and Heal, G. (1974) The Optimal Depletion of Exhaustible Resources. Paris, The Review of Economic Studies, 41, 3-28. http://dx.doi.org/10.2307/2296369
[18]	United Nations (1993) Handbook of National Accounting: Integrated Environmental and Economic Accounting, Interim Version. Studies in Method, Series F, No. 61, New York.
[19]	United Nations, European Commission, International Monetary Fund, Organisation for Economic Cooperation and Development and the World Bank (2003) Handbook of National Accounting: Integrated Environmental and Economic Accounting. Studies in Methods, Series F, No. 16, New York.
[20]	United Nations (2000) Handbook of National Accounting: Integrated Environmental and Economic Accounting. An Operational Manual. Studies in Methods, Series F, No. 78, New York.
[21]	Weatherstone, N. (2008) International Standards for Reporting of Mineral Resources and Reserves—Status, Outlook and Important Issues. World Mining Congress & Expo, Kraków.
[22]	Erlandsen, K., et al. (2004) Subsoil Asset Accounts. Results of a Questionnaire and Points for Further Discussion. 9th Meeting of the London Group on Environmental Accounting Proceedings & Papers (Draft), Copenhagen, 22-24 September 2004, 101-116.
[23]	Vanoli, A. (1995) Reflection on Environmental Accounting Issues. Review of Income and Wealth, 41, 113-137.
[24]	Interview with Rex Tillerson, CEO ExxonMobil. Financial Times, 9 March 2009.